Dabhol solution soon

“A solution is at sight. The group of ministers under the leadership of Defence Minister Pranab Mukherjee met, and I’m sure the issue will be resolved soon,” Sayeed told reporters in Chennai.

“Huge funds are blocked and an early solution is needed. The final discussions are at a conclusive phase.”

US conglomerate General Electric Co and construction firm Bechtel Group Inc, which originally held 10 per cent each, own a combined 86 per cent of Dabhol Power Company since buying out Enron Corp’s stake.

Sayeed declined to give the contours of the settlement, saying it would harm India’s interests.

Indian banks, led by state-run Industrial Development Bank of India, State Bank of India and private lender ICICI Bank Ltd have lent $1.3 billion to the project. The Indian lenders have reached an agreement with overseas creditors to buy out their loans for $230 million against nearly $300 million outstanding, according to local media reports.

Two dozen overseas creditors, including Bank of America Corp, Citigroup Inc and ABN AMRO, lent about $600 million, though about half of that has been recovered. Dabhol was generating 744 MW of power when it was shut and work was nearly complete on a 1,444 MW expansion and a 2.5 million tonne per year liquefied natural gas import terminal.

Earlier this month, an official with Bechtel’s Indian arm, said Bechtel and GE were close to selling their majority stake in the plant to Indian financial institutions for about $300 million.

The institutions will then transfer the plant to a special purpose vehicle to be managed by state-run National Thermal Power Corp and Gas Authority of India Ltd.